The expansion of the conflict in the Middle East will surely have a high cost for the global economy. Experts consulted by this newspaper estimate losses of around 1 billion dollars. However, the biggest question is how much the price of a barrel of crude oil will skyrocket, after an increase of almost 15% in the last six months. A new estimate from the Bank of America team places, in the worst scenario, Brent oil above $250 per barrel, 70% above its maximum ceiling, recorded in July 2008.
The US bank’s sights are set on the Strait of Hormuz between Oman and Iran, which connects Middle East oil producers with key markets in Asia Pacific, Europe and North America. “If shipments through Hormuz, a passing point for almost 20% of the world’s oil and liquefied natural gas, were closed for a significant period, oil could soar above $250 per barrel,” the researchers estimate. Bank of America analysts. The rise would also affect natural gas, just in the months before the beginning of winter.
The American firm believes that oil demand will maintain its growth during the remainder of the year, as a result of the reopening of the Chinese economy. The strength of the Asian economy as a whole, even beyond China, means that appetite for crude oil will remain on the rise even in 2024. Beijing’s decisions are another point of geopolitical concern for Bank of America: China has decided to cut by 33% in the export quotas of gasoline, diesel and aviation fuel from 2021, which further strains the global market.
Geopolitical considerations are not the only ones pointed out by the US bank. “An escalation of the conflict could raise refining margins due to possible interruptions in this activity in the Middle East,” estimates the new study published this Thursday. Analysts highlight that fuel freight rates could also increase, which would widen price differences between regions.
Geopolitical restrictions further strain the refining industry, which is still suffering, according to the report, the effects of the 2020 health crisis. This has meant that it will only recover to the level prior to the turn of the decade in 2023. However, the North American entity estimates that in 2024 the problems in the sector would continue, which would further limit the capacity to produce gasoline and other petroleum derivatives.
The analysis also highlights the effect of the cuts agreed by OPEC, which has kept refining margins high, along with the effects of the closing of the tap from Russia. The combination of both factors, the entity states, can cause “refineries to sacrifice efficiency rates” when processing other alternative types of oil.
Follow all the information Five days in Facebook, x and Linkedinor in our newsletter Five Day Agenda
The Five Day Agenda
The most important economic quotes of the day, with the keys and context to understand their scope
#Bank #America #alert #Brent #reach #barrel